The story of rampant abuse within CitiMortgage is garnering enormous attention throughout the blogosphere today.

Do you find it ironic that an institution such as Citi which was saved by Uncle Sam in 2008 would be abusing the old man a full three years later? No surprise here.

In a financial system in which regulators are ill equipped and overwhelmed by industry practices, rampant abuse and fraud seems to have become endemic. I tip my hat to Sherry Hunt, a whistleblower within CitiMortgage, for exposing the fraud within the mortgage underwriting business at Citi for which taxpayers foot the bill. Ms. Hunt gains immediate induction into the Sense on Cents Hall of Fame in the process.

The whistle-blower who originally brought the case, Sherry Hunt, an employee of Citi’s mortgage department, said the company actively undermined the process that was supposed to check for fraud in order to push through reckless loans and get higher profits.

The suit itself makes for good reading. We’ve pulled out the juiciest bits, and explain just what Citi appears to have been doing.

I strongly recommend a review of the ProPublica article for those who want to gain a greater insight into an abusive business practice that is reflective of an industry deeply engaged in an incestuous regulatory relationship.

So with $158 million for Citi and a cool $1 billion for Bank Of America, do you begin to get a fuller appreciation that the industry as a whole was likely engaged in widespread fraudulent business practices not only up to the bank bailout in 2008 but then beyond that as well? Do you have any real confidence that these practices are not going on even today? Without the courage of Ms. Hunt, would we have learned of these abuses within CitiMortgage?

A month ago I questioned whether there was sufficient evidence of abusive and fraudulent practices in the mortgage business on Wall Street (underwriting, servicing, securitizations, etc) to make a case that the industry as a whole violated the Racketeering Act? I would not expect that our ‘leaders’ in Washington would ever think about making that case; that said, I think there is plenty of reason to believe that a very real case could be made.

What will we likely see? Perhaps a number of individual cases.

And so we have witnessed individual cases but what about a scathing and industrywide review?

Where is a modern day Ferdinand Pecora when we really need him and why do I think that old Ferdinand continues to roll over in his grave?

With little in the way of real leadership in Washington and on Wall Street, fines get levied, taxpayers really foot the bill, the pursuit of illicit gains overwhelming principle continues, and America’s moral fibre erodes.

Do your friends, family, and colleagues a favor and get them to do the same. Thanks!!

I have no affiliation or business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets, our economy, and our political realm so that meaningful investor confidence and investor protection can be achieved.